Nasdaq can't shake Facebook troubles

Nasdaq has proposed a contested $62 million payout to trading firms that lost money because of its glitches on Facebook's opening day.

Nasdaq can't seem to put the Facebook IPO debacle behind it.

Shortly after the botched IPO, Nasdaq proposed a $40 million settlement to compensate brokers who were affected by trading glitches on Facebook's opening day (May 18).

Nasdaq (NDAQ) upped that figure to $62 million in mid-July, and Nasdaq CEO Bob Greifeld called it "definitive" during a July 25 conference call with analysts.

Citigroup (C) and UBS (UBS) have come out swinging. In a letter filed with the SEC late Wednesday, Citi said Nasdaq's compensation plan would only cover a "very small fraction of its losses."Citi went on to say, in its 17-page letter, that Nasdaq should be held liable for its "misdeeds" and not be permitted to claim any type of immunity.

UBS also deemed the plan"inadequate to address the magnitude of Nasdaq's unprecedented failures."

But others urged regulators to approve the plan. Citadel, another affected broker, called Nasdaq's offer "objective and fair."

The other broker-dealers that lost money on Facebook's opening day have just a few days left to submit comments to the SEC.

The fiercest critic of the original plan, Knight Capital Group (KCG) CEO Thomas Joyce, has been silent in recent weeks, after a trading glitch at his own firm nearly closed Knight's doors. A spokesperson for Knight Capital said the firm is not sure whether the market maker will submit comments.

Once the comment period is closed, the SEC will make a determination on the appropriate settlement.

On the July conference call, Nasdaq's CEO said the payout would be distributed in the fourth quarter, pending SEC approval.

Maureen Farrell is a staff writer at CNNMoney and covers Wall Street, banking, mergers and the stock and bond markets. Prior to joining CNNMoney, she covered venture capital and entrepreneurs for Forbes, and mergers and bankruptcy for Mergermarket and Debtwire, both divisions of the Financial Times.